Tax revenue lifts Cyprus public finances in opening months of 2026

Cyprus recorded a general government surplus of €567.10 million in the first quarter of 2026, as public revenue continued to rise despite a faster increase in government expenditure, according to preliminary figures released by the Cyprus Statistical Service (Cystat).

The latest data also show that Cyprus remained one of the few European Union countries to record a budget surplus, with Eurostat reporting a seasonally adjusted surplus equivalent to 0.4 per cent of GDP in the first quarter of 2026.

Cystat said the January to March 2026 surplus compared with €600.60m recorded during the same period of 2025.

Total government revenue increased by 5.8 per cent year-on-year to €3.82 billion, up from €3.61 billion in the corresponding quarter of last year.

The increase was primarily driven by higher receipts from social contributions, income taxes and taxes on production and imports.

Revenue from social contributions rose by 8.2 per cent to €1.28bn, compared with €1.18bn in the first quarter of 2025.

Revenue from taxes on income and wealth increased by 10.9 per cent to €1.09bn, from €985.90m a year earlier.

Taxes on production and imports climbed by 3.4 per cent to €1.13bn, compared with €1.09bn in the corresponding quarter of 2025.

Within that category, net VAT revenue increased by 5.5 per cent to €764.30m, up from €724.20m.

Capital transfers edged up to €5.00m, from €4.40m in the same quarter of last year.

By contrast, other current transfers declined to €59.10m from €68.40m.

Revenue from the sale of goods and services fell by 7.2 per cent to €243.80m, while property income receivable dropped by 31.2 per cent to €13.00m.

Government expenditure rose by 8.0 per cent to €3.25bn during the first quarter, compared with €3.01bn in the corresponding period of 2025.

Social transfers increased by 6.5 per cent to €1.36bn, from €1.28bn a year earlier.

Compensation of employees, including imputed social contributions and civil servants’ pensions, rose by 2.4 per cent to €974.90m, compared with €951.80m.

Intermediate consumption increased by 9.3 per cent to €303.90m, while other current expenditure surged by 31.8 per cent to €245.40m.

Property income payable also increased by 8.5 per cent to €79.00m, from €72.80m in the first quarter of 2025.

The capital account expanded by 21.6 per cent to €271.80m, comprising €188.90m in capital formation and €82.90m in capital transfers.

In the corresponding quarter of 2025, the capital account amounted to €223.50m, including €175.10m in capital formation and €48.40m in capital transfers.

Subsidies were the only major expenditure category to decline, falling by 19.5 per cent to €16.10m, from €20.00m.

Meanwhile, separate figures released by Eurostat showed that the seasonally adjusted general government surplus in Cyprus eased to 0.4 per cent of GDP in the first quarter of 2026, down from 1.2 per cent of GDP in the final quarter of 2025 and 0.9 per cent in the third quarter of 2025.

Across the euro area, the seasonally adjusted government deficit stood at 3.1 per cent of GDP during the first quarter, marginally improving from 3.2 per cent in the previous quarter.

The corresponding deficit for the European Union also stood at 3.1 per cent of GDP, down from 3.4 per cent in the fourth quarter of 2025.

Eurostat said government revenue in the euro area amounted to 47.1 per cent of GDP, compared with 47.3 per cent in the previous quarter, while expenditure fell slightly to 50.2 per cent of GDP from 50.4 per cent.

In the European Union, revenue represented 46.6 per cent of GDP, compared with 46.7 per cent in the previous quarter, while expenditure eased to 49.8 per cent of GDP from 50.1 per cent.